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Q2 2009 Inscape Corporation Earnings Conference Call - Final.

Article Excerpt
OPERATOR: Welcome to the second quarter results conference call. During the presentation all participants will be in a listen-only mode. Afterwards we will conduct a question-and-answer session. (OPERATOR INSTRUCTIONS) As a reminder, this conference is being recorded Friday December 5, 2008.

I would now like to turn the conference over to Mr. Peter Brunelle, President and CEO. Please go ahead.

PETER BRUNELLE, PRESIDENT, CEO, INSCAPE CORPORATION: Thank you, operator, and good morning, everyone. I'll open our qualm a few introduction remarks and then turn things over to Kent for a detailed review of our financial results. Undoubtedly this was a difficult quarter for us as revenue was impacted by the delay of two large projects worth approximately $3 million. Given the size of our business, the impact of a change in timing of a relatively large project shifting between quarters has an obvious and dramatic impact on results. While we have experienced similar sales volatility in a number of instances over the last few years, there is no doubt that we're also seeing a drop in demand related to changing work styles in turn demanding lighter scale less costly product solutions within the systems product category. We do feel confident that the introduction of Scala, our newest system product which was previewed this past June to critical acclaim in both the US and Canada, will help us address this trend, and therefore, more competitively position us to capture new project opportunities moving forward.

As a result of the lower sales, gross margins for the quarter were compressed given lower overhead absorption and to a lesser degree as a result of higher material input cost versus the prior year and prior quarter.. As always, we remain committed to pursuing process improvement activities that will both help reduce our cost instruction and continue to increase our ability to better serve customers.

Moving to operating expenses, we continue to diligently manage general and administrative expenses which for the first six months of fiscal 2009 have paced below the prior year, at the same time we're making incremental investments in sales and marketing, which we believe are required to best promote the launch of new products critical to capturing new business. Undoubtedly these are challenging economic times, and our industry, which is heavily influenced by factors...

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